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Vista Outdoor's (VSTO) Q3 Earnings Miss Estimates, Stock Down
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Vista Outdoor Inc. (VSTO - Free Report) reported dismal results in third-quarter fiscal 2024 (ended Dec 24, 2023), with earnings and revenues missing the Zacks Consensus Estimate. The metrics declined on a year-over-year basis.
The downside was caused by lower shipments in various categories, driven by normalized channel inventory and reduced pricing at The Kinetic Group. The Revelyst segment faced challenges due to reduced volume and an unfavorable mix stemming from ongoing short-term consumer pressures.
The sale of The Kinetic Group for $1.91 billion remains on track, anticipated to create meaningful value. Also, Revelyst's GEAR Up transformation program progresses well, aiming for $100 million of run-rate cost savings in fiscal 2027. The program outlines a clear path to doubling standalone adjusted EBITDA in fiscal 2025.
Following the earnings release, Vista Outdoor’s shares lost 1.1% in the after-market trading session on Jan 31.
Earnings & Revenue Discussion
Vista Outdoor reported adjusted earnings per share (EPS) of 80 cents, missing the consensus estimate of 84 cents by 4.8%. In the year-ago period, the company reported EPS of $1.27.
Vista Outdoor Inc. Price, Consensus and EPS Surprise
Total revenues of $682 million also missed the consensus mark of $688 million by 0.8% and declined 10% on a year-over-year basis.
Operating Highlights
Gross profit of $203 million decreased 15% year over year. The gross margin was 29.7%, down 190 basis points (bps) from the year-ago period’s levels. The downtick was due to lower volumes and higher input costs due to inflation. However, this was partially offset by favorable foreign exchange rates at Revelyst.
Adjusted operating income declined 37% year over year to $69 million. The adjusted operating income margin contracted 443 bps year over year to 10%.
The adjusted EBITDA totaled $94 million, down 30% year over year. Adjusted EBITDA margins fell 405 bps from the year-ago period to 13.7%.
Segment Results
Vista Outdoor reports through two segments — The Kinetic Group and Revelyst.
The Kinetic Group generated revenues of $365 million in the quarter under review, down 9% year over year. The operating income margin contracted 325 bps year over year to 26.1%.
The segment’s adjusted EBITDA decreased 18% year over year to $102 million. Adjusted EBITDA margins contracted 301 bps from the year-ago period to 27.9%.
Revenues from Revelyst totaled $317 million, down 10% from a year ago. Operating income margin contracted 471 bps to (0.9)%.
The segment’s adjusted EBITDA decreased 53% year over year to $15 million. The adjusted EBITDA margins fell 416 bps year over year to 4.6%.
Financials
As of Dec 24, 2023, Vista Outdoor reported cash and cash equivalents of $57 million compared with $86 million at fiscal 2023-end. Long-term debt was $764 million, down from $985 million reported at fiscal 2023-end.
Net cash provided by operating activities, as of Dec 24, 2023, totaled $240 million compared with $308 million a year ago. Adjusted free cash flow totaled $270 million, compared with $315 million a year ago.
Fiscal 2024 Guidance
For fiscal 2024, Vista Outdoor expects sales to be in the range of $2.725-$2.825 billion. It also expects adjusted EBITDA margin to be between 15.5-16.25%.
Adjusted earnings per share is expected to be in the range of $3.65 to $4.05.
Cash from operating activities is expected to be between $284 million and $336 million. Adjusted free cash flow is projected in the range of $265-$315 million.
Zacks Rank & Key Picks
Vista Outdoor currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for VIRC’s 2024 sales and EPS indicates a rise of 15.7% and 32.4%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) flaunts a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 50.3% on average. Shares of SKX have increased 26.9% in the past year.
The Zacks Consensus Estimate for SKX’s 2024 sales and EPS indicates a rise of 10.3% and 16.4%, respectively, from the year-ago period’s levels.
Corsair Gaming, Inc. (CRSR - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 21.2% in the past year.
The Zacks Consensus Estimate for CRSR’s 2024 sales and EPS indicates an improvement of 12.1% and 39.8%, respectively, from the year-ago period’s levels.
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Vista Outdoor's (VSTO) Q3 Earnings Miss Estimates, Stock Down
Vista Outdoor Inc. (VSTO - Free Report) reported dismal results in third-quarter fiscal 2024 (ended Dec 24, 2023), with earnings and revenues missing the Zacks Consensus Estimate. The metrics declined on a year-over-year basis.
The downside was caused by lower shipments in various categories, driven by normalized channel inventory and reduced pricing at The Kinetic Group. The Revelyst segment faced challenges due to reduced volume and an unfavorable mix stemming from ongoing short-term consumer pressures.
The sale of The Kinetic Group for $1.91 billion remains on track, anticipated to create meaningful value. Also, Revelyst's GEAR Up transformation program progresses well, aiming for $100 million of run-rate cost savings in fiscal 2027. The program outlines a clear path to doubling standalone adjusted EBITDA in fiscal 2025.
Following the earnings release, Vista Outdoor’s shares lost 1.1% in the after-market trading session on Jan 31.
Earnings & Revenue Discussion
Vista Outdoor reported adjusted earnings per share (EPS) of 80 cents, missing the consensus estimate of 84 cents by 4.8%. In the year-ago period, the company reported EPS of $1.27.
Vista Outdoor Inc. Price, Consensus and EPS Surprise
Vista Outdoor Inc. price-consensus-eps-surprise-chart | Vista Outdoor Inc. Quote
Total revenues of $682 million also missed the consensus mark of $688 million by 0.8% and declined 10% on a year-over-year basis.
Operating Highlights
Gross profit of $203 million decreased 15% year over year. The gross margin was 29.7%, down 190 basis points (bps) from the year-ago period’s levels. The downtick was due to lower volumes and higher input costs due to inflation. However, this was partially offset by favorable foreign exchange rates at Revelyst.
Adjusted operating income declined 37% year over year to $69 million. The adjusted operating income margin contracted 443 bps year over year to 10%.
The adjusted EBITDA totaled $94 million, down 30% year over year. Adjusted EBITDA margins fell 405 bps from the year-ago period to 13.7%.
Segment Results
Vista Outdoor reports through two segments — The Kinetic Group and Revelyst.
The Kinetic Group generated revenues of $365 million in the quarter under review, down 9% year over year. The operating income margin contracted 325 bps year over year to 26.1%.
The segment’s adjusted EBITDA decreased 18% year over year to $102 million. Adjusted EBITDA margins contracted 301 bps from the year-ago period to 27.9%.
Revenues from Revelyst totaled $317 million, down 10% from a year ago. Operating income margin contracted 471 bps to (0.9)%.
The segment’s adjusted EBITDA decreased 53% year over year to $15 million. The adjusted EBITDA margins fell 416 bps year over year to 4.6%.
Financials
As of Dec 24, 2023, Vista Outdoor reported cash and cash equivalents of $57 million compared with $86 million at fiscal 2023-end. Long-term debt was $764 million, down from $985 million reported at fiscal 2023-end.
Net cash provided by operating activities, as of Dec 24, 2023, totaled $240 million compared with $308 million a year ago. Adjusted free cash flow totaled $270 million, compared with $315 million a year ago.
Fiscal 2024 Guidance
For fiscal 2024, Vista Outdoor expects sales to be in the range of $2.725-$2.825 billion. It also expects adjusted EBITDA margin to be between 15.5-16.25%.
Adjusted earnings per share is expected to be in the range of $3.65 to $4.05.
Cash from operating activities is expected to be between $284 million and $336 million. Adjusted free cash flow is projected in the range of $265-$315 million.
Zacks Rank & Key Picks
Vista Outdoor currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Virco Mfg. Corporation (VIRC - Free Report) sports a Zacks Rank #1 (Strong Buy). VIRC has a trailing four-quarter earnings surprise of 188.6% on average. VIRC’s shares have surged 146% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VIRC’s 2024 sales and EPS indicates a rise of 15.7% and 32.4%, respectively, from the year-ago period’s levels.
Skechers U.S.A., Inc. (SKX - Free Report) flaunts a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 50.3% on average. Shares of SKX have increased 26.9% in the past year.
The Zacks Consensus Estimate for SKX’s 2024 sales and EPS indicates a rise of 10.3% and 16.4%, respectively, from the year-ago period’s levels.
Corsair Gaming, Inc. (CRSR - Free Report) carries a Zacks Rank #2. It has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 21.2% in the past year.
The Zacks Consensus Estimate for CRSR’s 2024 sales and EPS indicates an improvement of 12.1% and 39.8%, respectively, from the year-ago period’s levels.